What Is Service Revenue Normal Balance

Common stock is part of capital on the right side of the accounting equation and is normally a credit balance.

What is service revenue normal balance. Comment related user ask. This is the key to accounting and bookkeeping. In accounting terminology a normal balance refers to the kind of balance that is considered normal or expected for each type of account. Therefore revenue is cash in so it s a dr to cash and a cr to the income line.

Service revenue appears at the top of an income statement and is separated but added to the product sales for a revenue total. It is important to note that advanced collections from clients or customers are not treated as service revenue yet. You ve got to learn it to do decently. For asset and expense accounts the normal balance is a debit balance.

Accounts with balances that are the opposite of the normal balance are called contra accounts. For liability equity and revenue accounts the normal balance is a credit balance. It is shown as the first item in the body of the income statement of a service business. Unearned revenue is a liability and is included on the credit side of the balance sheet.

Cash is an asset on the left side of the accounting equation and is normally a debit balance. Cost of goods sold normal balance. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. Hence contra revenue accounts will have debit balances.

Home green board miscellaneous question. A normal balance is the expectation that a particular type of account will have either a debit or a credit balance based on its classification within the chart of accounts it is possible for an account expected to have a normal balance as a debit to actually have a credit balance and vice versa but these situations should be in the minority. What is the normal balance for the service revenue account. Therefore income accounts have a normal credit balance.

An income statement is not concerned with cash flow it is concerned with revenues gains expenses and losses in both the operating and non operating activities of the business during a specific period of time. Cost of goods sold is an expense on the left side of the. Service revenue is a revenue or income account. Unearned revenues are recognized when customers pay up front for the products services.

It can either be a debit balance or a credit balance. 3 years ago.